New buyer demand across the housing market is continuing to decline at a steady pace, according to the latest UK Residential Survey from the Royal Institution of Chartered Surveyors (RICS).

RICS suggested that higher interest rates and a “weakening macroeconomic landscape” are widely being cited by the industry as causes in the softening in momentum. The association also noted that its survey survey sample was largely gathered prior to the Bank of England’s latest 50 basis point rate hike.

The net balance which RICS uses to monitor market activity is a proportion of respondents reporting a rise in prices minus those reporting a fall, and therefore measures how widespread price rises or falls are on balance, rather than the magnitude of any price changes.

In terms of new buyer enquiries, RICS reported that its headline net balance came in at -25% in July, a figure broadly in-line with a reading of -27% posted in June. This is now the third successive month in which this indicator has been in negative territory, which RICS said represents the longest stretch of falling demand seen since the early stages of the pandemic.

Alongside this, agreed sales also edged down, with the latest net balance remaining modestly negative at -13%, compared to a reading of -14% previously. Looking ahead, near-term sales expectations slipped a little deeper into negative territory, posting a net balance reading of -20%, relative to a figure of -11% last month.

Furthermore, average stock levels on estate agents books – at 36 per branch – remain close to an all-time low. RICS stated that its respondents have seen little change in the volume of market appraisals being undertaken in relation to the trend observed 12 months ago, suggesting a material pick-up in the supply backdrop is unlikely to emerge in the immediate future.

Commenting on the latest RICS data, senior personal finance analyst at Hargreaves Lansdown, Sarah Coles, said: “Plenty of agents are feeling the impact of less demand. Others are highlighting that even when people decide to buy, life continues to get harder, so more sales are falling through as they worry about job security and rising prices. Some agents say that agreed prices are being renegotiated.

“However, it’s still  a very mixed picture, and some agents say it’s as busy as it has ever been, and some buyers are in a hurry to snap up a property before mortgages get even more expensive.
The rental market remains horrible. The number of tenants is up again, including would-be first-time-buyers who are worried about the cost of living, and have decided to rent again instead.

“Meanwhile, the number of landlords has dropped for the third month in a row. Some are warning that legislative changes are driving more landlords out of the market, so with nobody filling the gap, shortages are getting even worse. It means that agents aren’t expecting any let-up in rising rents.”

Share Story: